House prices up £5,000 a month
THE average cost of a home soared by more than £5,000 last month, triggering fears that Chancellor Gordon Brown will hit the market with new taxes in this week's Budget.
Despite two interest rate rises in four months and Government warnings about the dangers of big mortgages, buyers across the country are bidding up prices.
The housing market website, Rightmove.co.uk, reports that prices rose 2.9% in February.
The organisation said that UK average asking prices are £179,570, more than £5,000 higher than a month ago and 5% above the average price at the beginning of the year. The average figure in London has reached a new high of £275,459.
The figures are higher than other studies, thought to be because they include a larger number of higher value properties and cash sales.
The details emerged amid mounting speculation that the Chancellor will use Wednesday's Budget to increase property taxes on the pretext of taming the market.
A Treasury study last year suggested the Government believes 'investment in housing is relatively lightly taxed compared to other investments'.
That has been challenged by the respected Institute of Fiscal Studies. However, it warned: 'This suggests that the Chancellor might consider raising housing taxes if he decides in the future that he needs more revenue.'
It was claimed last year - and immediately knocked down by the Treasury - that Capital Gains Tax could be imposed on the gains made in a booming property market.
Other options include imposing VAT on the sale price of new homes coupled with a rise in stamp duty tax on the purchase of property.
Previous increases in stamp duty since 1997 has seen Government income from the tax soar by a staggering 430%- up from £675m to £3.59bn.
There might also be a new tax on profits made in the burgeoning buy-to-let market.
At the same time, measures are expected to encourage families to opt for long-term fixed rate mortgages. This might involve moves to bring an end to short-term discount rate deals, which make the fixed rates seem expensive.
The Chancellor is desperate to take the heat out of the housing market, suggesting this is threatening to destablise the entire economy.
He is expected to give his seal of approval to proposals for a massive building boom in housing market hot spots, regardless of local objections and concerns for the countryside.
Rightmove's Miles Shipside said: 'All the indices are saying the same thing: the market has rebounded with a vengeance this year, and for the moment there's no sign of it abating.'
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